Over the past few weeks, some of the best performing cryptocurrencies haven’t been Bitcoin and Ethereum. Rather, it’s been assets like Chainlink (LINK), Synthetix Network Token (SNX), and Kyber Network (KNC).
These Ethereum-based tokens, which are closely linked to the decentralized finance, have enjoyed parabolic gains. Take Chainlink, for example. Since the March lows, the popular cryptocurrency has gained approximately 400 percent.
Altcoins have been surging so hard that there have been some traders predicting a return to an “altcoin season,” whereas
But, as Bitcoin and Ethereum have begun to push higher, the spotlight has been taken off altcoins.
Ethereum tokens, other top altcoins undergo a pullback after parabolic surges
CryptoSlate data indicates that some of the aforementioned tokens — and many other popular cryptocurrencies — are now down strongly since local highs established earlier this month.
- After peaking at $8.94 on Jul. 15, LINK is now trading at $7.46. That means the crypto has incurred a loss of 16.5 percent.
- After peaking at $0.387 on Jul. 20, Aave’s LEND is now trading for $0.311. That means the crypto has incurred a loss of 19.7 percent.
- After peaking at $4.02 on Jul. 20, Synthetix Network Token is now trading for $3.48. That means the crypto has incurred a loss of 13.5 percent.
- After peaking at $1.94 on Jul. 2, Kyber Network is now trading for $1.64. That means the crypto has incurred a loss of 16.5 percent.
The altcoins mentioned above are just a handful out of many more that have seen notable corrections over recent days and weeks.
The recent weakness in the altcoin market seems to be related to a shift in the focus of cryptocurrency investors.
As precious metals and the stock market have broken higher, the crypto spotlight has once again been placed on Bitcoin and Ethereum, which will determine the long-term trends of the entirety of this nascent market. This focus on these two crypto “mega-caps” also comes as their volatility levels have reached multi-year lows, suggesting a macro breakout is imminent.
Until Bitcoin and Ethereum establish a trend, traders have said, altcoins will struggle to post consistent gains.
DeFi has room to grow
With the altcoin losses largely being centralized in DeFi-focused tokens like LEND and SNX, there has naturally been discussion about if the DeFi bubble is popping — or if there even is a bubble in the first place.
According to prominent investors in the space, the bubble — if there is one — likely isn’t popping at the moment.
Andrew Kang, the founder of Mechanism Capital and a prominent analyst in the DeFi space, commented at the start of this month that DeFi is still in the earliest phases of growth.
He largely attributed this optimism to on-chain data — namely, the number of users in the DeFi space.
With only a few thousand individuals using DeFi applications each day, he suggested, there is room for exponential upside in the longer run. Heck, even one of Bitcoin’s biggest bulls, Chamath Palihapitiya, was confused when he was asked about DeFi in a recent interview.
Kang added that with Asian cryptocurrency investors barely catching onto DeFi and development on these protocols hitting an “inflection point,” it is hard for him to argue that this segment of crypto is in a bubble.
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